Adding an extension or a loft conversion to your home could increase its value by almost a quarter, according to research by Nationwide*. In addition, the Society has changed its mortgage proposition for further advances, putting borrowers into an excellent position to take advantage of the new relaxed planning laws announced by the Government today.
While many other lenders charge higher rates** on a limited range of products for further advances, Nationwide offers access to its full range of mortgage deals with a 0.10% discount for existing customers. This brings its rates down to as low as 3.19% for a two-year fixed rate (60% LTV). Later this month, borrowers who use a FlexAccount as their main current account*** will also have access to Nationwide’s four-year fixed rate Flexclusive mortgage from 2.99% (60% LTV) and five-year tracker Flexclusive mortgage from 3.49% (70% LTV) for further borrowing.
Nationwide’s House Price Index Special Report looked at the value of improvements made to an average three-bedroom house. Nationwide found:
- Creating an extra bathroom could add 6% to the value
- Adding another double bedroom can push up the value by 12%1
- Building an extension or loft-conversion to create a double bedroom and en-suite bathroom could add 23%2 to the value
- Increasing floor space by 10% can add 5% to the average value
The price for building an extension can cost, on average, around £1,000 per m2 or £23,0003 for a single storey and £76,0004 for a double storey.
For people living in more expensive parts of the UK, such as London, where moving from a three bedroom to a four bedroom property carries a £90,000 premium on average, extending may well be the only solution for the growing family.
Commenting on the Special Report, Robert Gardner, Nationwide's Chief Economist, said: “With housing market demand still very weak, increasing numbers of homeowners may opt to improve rather than move. Our research assesses the factors that affect the value of homes, and the potential to add value.
“Having more useable space is generally thought to be consistent with better quality accommodation and people are prepared to pay for it. A 10% increase in floor space, other things equal, adds 5% to the price of a typical house, while adding space equivalent to the size of a double bedroom to a two bedroom house can add around 12% to its value.
“A second bathroom is also a favourite with homeowners and our research shows that creating an additional bathroom can add 6% to the value of the average house. Homeowners that add a loft conversion or extension incorporating a double bedroom and a bathroom can add about 23% to the value of an existing three bedroom, one bathroom house.”
Cost of borrowing an additional £23,000 and £76,0005
|Two-year fixed rate, £99 non refundable, upfront booking fee, no other product fee
|Two-year fixed rate, £99 non refundable, upfront booking fee booking fee, no other product fee
Tracie Pearce, head of mortgages at Nationwide, explains: “The Government’s announcement today will no doubt be welcome news for homeowners who are attracted to the idea of improving their property by adding both space and value rather than face the extra costs and expense of moving to somewhere bigger. We believe our new further advance rates are among the most competitive in the market place. That, combined with the new, relaxed planning laws, could make a home extension an affordable solution.”
Notes to editors:
* Nationwide’s House Price Index Special Report October 2011
**Further advance rates
***Main FlexAccount customers benefit from exclusive mortgage offers. For eligibility criteria: http://www.nationwide.co.uk/current_account/account_benefits.htm
1Each additional bedroom is assumed to have a floor area of approximately 13m2
2The extension/loft conversion is assumed to add approximately 30m2
3Cost of an average single story extension.Sourced from www.whatprice.co.uk.
4Cost of an average double storey extension. Sourced from www.whatprice.co.uk.
5Based on borrowing £23,000 more on a property worth £160,000 with an existing mortgage of £76,000 and based on borrowing £76,000 more on a property worth £200,000 with an existing mortgage of £76,000.
- Applications are required for all products. Further details of terms and conditions are available on request.
- If you're already a Nationwide mortgage customer and want to borrow more, you could borrow up to 85% of the value of your home (including your current mortgage).
- Selected rates:
Further advance rates for loans of £5,000+
- Two-year fixed rate at 3.59% (up to 60% LTV) with £0 product fee and a £99 non-refundable booking fee, other rates up to 85% LTV available
- Three-year fixed rate at 3.79% (up to 70% LTV) with £0 product fee and a £99 non-refundable booking fee, other rates up to 85% LTV available
- Five-year fixed rate at 3.79% (up to 70% LTV) with £0 product fee and a £99 non-refundable booking fee, other rates up to 85% LTV available